DES MOINES, Iowa
The Iowa Gaming Association is warning that four of the state's 18 casinos likely would be forced to close if lawmakers were to approve a casino tax increase that is supported by Gov. Terry Branstad, citing a study commissioned by the association that was
The study was conducted by Harvey Siegelman of the Strategic Economics Group, a Des Moines-based firm formed by Siegelman. Siegelman was formerly the state economist.
The study found that four of the state's casinos "currently show negative corporate equity" and that "another five had income on their books of less than $10 million -- much of which may already be obligated in support of loans."
"Our interviews with facility managers found that if confronted with the proposed tax increase, their strategy would be first to reduce payrolls, amenities, purchases and advertising -- in other words downscaling," the study said. It did now specify which casinos might close.
The casinos, however, may not have to be too concerned. Republican Rep. Tom Sands of Wapello, who is chairman of the House Ways and Means Committee, indicated the proposed tax increase is unlikely to even get a vote in the full House.
"We don't have much of an interest to bring that forward," Sands said.
Branstad spokesman Tim Albrecht, meanwhile, rejected the findings of Siegelman's study.
"The casinos have been successful and we believe they will continue to flourish under Governor Branstad's proposal," Albrecht said. "The governor's position remains clear and that is if we are going to have job growth in Iowa it will come from the thousands of small businesses who locate or expand here, not from the existing 18 casinos."
The proposed casino tax increase would generate roughly $190 million. Branstad has proposed using that money to pay for his proposed deep cut in corporate income taxes.
The study argues that the result would be layoffs of 2,600 casino workers, even if none of the facilities were forced to close, and about $5 million worth of revenue losses to local communities.
Casinos employ about 10,000 people statewide. If closures did happen, 4,500 jobs could be lost, the study said. Thousands of vendors supplying the casinos also could lose up to $265 million, the study found.
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